Copyright and Preservation

V. A REVIEW OF SEVERAL POSSIBLE SOLUTIONS

A. Negotiate Agreements with Publishers

The most obvious approach is to work within the existing
statutory framework and to seek permission from the various
copyright owners. The tumultuous years during and immediately
following the passage of the new Act were characterized by
uncertainty on both sides of the library/publisher copyright debate.
But after 12 years of experience with the Act, librarians are used
to the way in which it works, and they seem reasonably content with
the balance struck by Section 108.189
Similarly, the revolution in photocopying technology has stabilized,
and publishers may no longer feel as threatened by basic library
copying as they once did. The new threat is electronic
dissemination, known as electro-copying. But even in the electronic
environment, progress has been made. As commercially available full
text retrieval systems have matured, publishers have routinely
negotiated royalty mechanisms to compensate copyright owners for the
electronic use and distribution of their works. These arrangements
have demonstrated that agreement is possible, and that there can
actually be more control, not less, over the distribution of a work
in an electronic environment. For the print publisher, negotiation
of such an agreement can provide a new income stream at no
additional cost.

The difficulty with negotiating with publishers is largely one of
scale. There are so many publishers that it would be difficult, if
not impossible, to locate and negotiate with all of them without a
staff dedicated to that activity similar in size to the one at UMI.
This problem suggests the need to deal with a group of publishers,
through an organization such as the American Association of
Publishers (AAP) or a collective such as the Copyright Clearance
Center (CCC). However, a group of publishers such as the AAP
typically has no authority to bind its members. Moreover, the AAP
has generally taken hard-line positions on copyright matters and may
not be willing to back away from that stance even to consider
preservation issues from a fresh perspective. (The CCC will be
discussed, infra, under "collectives".) Nonetheless, it may
be worthwhile to explore the issues with a representative
cross-section of publishers from commercial and academic sectors and
wide- and special-circulation publishers. If agreement were
possible, it could not only open up the publications of those
publishers to the preservation program, it could also demonstrate
good faith and have precedential or persuasive value when dealing
with other publishers.

B. Reliance on Fair Use: Market Value of Older Works

Although fair use is a judicially created rule of reason, it has
now been incorporated into the Copyright Act. As a result, it could
be modified directly through the legislative process or it could
continue to grow through judicial interpretation of the statute.

Since one of the key elements of fair use is the market value of
a work, it is reasonable to inquire at what point the market value
is sufficiently diminished to permit a generally desirable activity
such as preservation copying to go forward. One might think of this
approach as being similar to investigating the half-life of a
radioactive specimen. The maximum value of a work to its owner
occurs, in most cases, shortly after publication. At some point,
the value is diminished to only half of what it was then. At
another point, it is half again, or only one quarter of its maximum
value. Somewhere on this curve, there is likely to be a point at
which other socially desirable uses become more acceptable than they
were when the value of the work was at its peak. Where might that
point be?

There are several ways to approach the question. At the outside,
one might argue that the statute incorporates, or has at various
times tried to incorporate, this idea by making copyright finite in
duration. Thus, it might be suggested that the point occurs at the
life of the author plus 50 years. Or it might be suggested that 75
years, 56 years, 28 years, or 14 years, the previous terms of
copyright, best represent the concept. But as these figures have
changed over time, they seem largely arbitrary, chosen for a variety
of reasons, without any actual market analysis.

Some recent studies suggest a more scientific approach to the
issue. According to a study conducted at the American Bookseller
Association convention in 1987 and reported in Publishers
Weekly190, most books published
in the United States go out of print in about three years.191 Presumably, the implication of this
fact is that ongoing sales of the work have diminished to the point
where it is no longer economically viable for the publisher to keep
the work in print. Even more graphic is that when asked about the
"typical" pattern of sales for a book with a 2.5-year life cycle,
publishers reported that 91.14 percent of all sales occur in the
first year.192

Similarly, public library use studies suggest that with the
exception of a relatively small number of classic titles, the
circulation of most new popular books diminishes each year.193 Interlibrary loan studies are
similar, with most of the requests occurring during the first few
years after publication, but with a somewhat higher level of
residual interest. According to a study published in 1979, about
half (48.6%) of all interlibrary photocopy requests are for articles
published within the last five years and 69.5% are for articles less
than ten years old.194

Citation studies reveal similar patterns. Even in law, where
precedent is vital, citation of decisions decreases substantially
with time. According to a citation study done in 1976 by Posner and
Landes, the median age of precedent cited by the Supreme Court was
5.4 years and by the U.S. Courts of Appeals was 4.3 years. Decisions
of the U.S. Supreme Court had a much longer half-life than others at
about 9.8 years, although the age of cited cases varied somewhat
with the legal issue involved. The half-life of citations in
scholarly journals is somewhat shorter than citations in judicial
opinions. According to at least one study of the literature, the
half-life appears to be about 5.5 years in economic and sociological
literature and 4 years in physics.195

All of this suggests that the use of most works drops off
significantly after about five years. Most book sales occur during
the first year after publication; most uses of journal literature
occur within the first five years. Even if a substantially longer
period were adopted--perhaps as much as ten years--to avoid
compromising the rights of the copyright owner, it would still seem
reasonable then to permit certain preservation-oriented copying
beyond the limits of section 108 (b) and (c) under fair use. Under
Seltzer's formulation of fair use, such copying could easily be seen
as being "necessary for the furtherance of knowledge, literature,
and the arts" and not depriving the creator of the work of an
appropriately expected economic reward.196 Similarly, in Latman's analysis,197 after that period of time has
passed, the reasonable copyright owner has little expectation of
further economic reward and would be likely to consent to limited
preservation copying to keep his or her book on the shelves of
libraries.

C. Amend Section 108 to Permit Expanded Preservation Copying

One way to deal with the uncertainties in the Act is to seek an
amendment to Section 108 to clarify the aspects of the law that now
appear to constrain preservation.

Based on the issues identified in this paper, such an amendment
might eliminate the requirement that the copying of published works
be for replacement purposes only. It might also delete the need to
check with the publisher. Finally, it might clarify that
preservation copies could be distributed, at least to other
libraries in like circumstances, and it might at least be silent on
the formats into which the materials could be copied, thus
permitting by implication copying into electronic formats.

Some years ago, Dr. Martin Cummings proposed such an amendment to
the Register of Copyright:

"The right [of] reproduction under this section applies to a copy or
phonorecord of a published work duplicated in facsimile form, in the
same or in a different medium, for the purpose of archival
preservation."198

At the time, the Register rejected this idea, but urged the
library community to pursue the idea with other groups, including
the user, author and publishing communities "with a view to
developing a common legislative position".199 The Register was worried about the
use of the phrase "in the same or in a different medium" after the
reference to "facsimile form" since the more expansive clause was
not used elsewhere in the Act and could be confusing. He was also
worried about the potential for using such copying to create a
system for "mass facsimile document storage" and "electronic
transmission, and display and printout at multiple remote cites
[sic]."200 He noted that "facsimile
form" was used specifically to exclude the reproduction of a work in
machine-readable form.

The author of this paper suggests the following language as a
basis for discussion among the communities mentioned in the
Register's Report:

(b) The rights of reproduction and distribution under this section
apply to a copy or phonorecord of an unpublished work duplicated in
any medium now known or later developed solely for the
purpose of preservation or security, or for deposit for
research use in another library or archives of the type described by
clause (2) of subsection (a), if the copy or phonorecord reproduced
is currently in the collection of the library or archives.

(c) The rights of reproduction and distribution under this
section apply to a copy or phonorecord of a published work
duplicated in any medium now known or later developed solely
for the purpose of replacement or preservation of a copy or
phonorecord that is damaged, deteriorating, lost, or stolen.

This language seems to meet the goals identified above and would
permit the preservation program to go forward using all available
formats. It should be noted, however, that by its own terms ("a
copy"), and by virtue of the fact that it would be part of Section
108, the proposed section would still limit preservation copying to
single copies.

D. Collective Licensing

A license agreement can provide certainty by giving permission to
copy in return for the payment of a fee. If the license covers a
large number of publishers, it can also help to keep the transaction
costs for individual titles to a minimum. Such a license agreement
could be either a voluntary agreement between the parties or a
compulsory arrangement required under law. A compulsory license
would provide great certainty, but might also create a
record-keeping burden. A voluntary agreement can demonstrate good
faith but only binds the parties. Since some publishers might elect
not to participate, the voluntary license carries potentially higher
transaction costs for the negotiation of many separate agreements.
A voluntary agreement would also be unlikely to solve the problem
for publishers no longer in business.

1. Voluntary Licenses

Voluntary license agreements could be negotiated with individual
publishers, as discussed earlier, or with a collective reproducing
rights organization such as the Copyright Clearance Center
(CCC).

The Copyright Clearance Center was created after the passage of
the 1976 Act as an organization to represent publishers and provide
a centralized mechanism for the collection and payment of royalties.
Beginning with a relatively small list of publishers and titles, the
Copyright Clearance Center today represents over 6,300 publishers
worldwide, covering some 1.1 million published titles.

The initial focus of the Copyright Clearance Center was on
corporate users, and both collections and payments were based on
individual copying transactions.201
More recently, however, the Copyright Clearance Center has developed
a program for blanket licensing in the corporate sector, and it has
begun to explore the development of similar programs for academic
institutions. Such programs are typically based on a sampling of
actual photocopying during a specified period of time. As a result,
they avoid the necessity of keeping detailed records of all copying
throughout the year. A two-year pilot study now under way at
Columbia University, Northeastern University, and Stanford
University will collect similar information about the amount and
kind of copying done on those campuses. At the conclusion of the
study, a recommendation will be made for a blanket license to cover
university copying. Some institutions participating in the brittle
books program may come under the protection of such agreements. It
is important to keep in mind, however, that the CCC cannot license
all university copying; it can only license copying for those
publishers that participate in their programs.202

No license is needed for copying permitted under the statute.
However, wherever the preservation program might exceed those
limits, participating institutions might find it appropriate to
negotiate a license agreement with the Copyright Clearance Center,
at least for those publishers which the CCC has authority to
represent. Most such agreements are separately negotiated based
on the type of industry (profit-making vs. non-profit), the amount
of copying, etc. But as with the agreements UMI has reached, the
amount of the royalties tends to be based on the demands and needs
of individual publishers. As a result, it is difficult to speculate
precisely about what kind of agreement might be reached.
Nonetheless, it is a mechanism worth exploring since it could
provide a great deal of certainty without much administrative
cost.

The CCC has concentrated its work to date on traditional
photocopying; it is just beginning to explore the implications of
electronic dissemination. The CCC has established a task force that
is looking into a program to license scanning and reproducing
materials in electronic format for distribution within a
corporation, much as the National Library of Medicine has begun its
programs wholly inside the library. The CCC's investigations do not
include, however, resale of the documents or wider distribution
beyond the individual company. For now, at least, that type of
electronic copying and distribution will still have to be negotiated
individually with individual publishers.

Compulsory licenses have been used204 historically to provide a mechanism
for compensation to creators in situations where control of copies
or control over the use of a particular work is difficult.205 Many commentators have suggested
that the electronic environment is exactly the type of situation
where control over a work can be lost since such works can easily be
copied to disk or paper or copied from one datafile to another.206 However, it now seems that at least
the first generation electronic copy can be easily controlled if the
supplier is acting in good faith. The experience with full-text
information retrieval systems such as DIALOG and NEXIS demonstrates
that the computer itself can keep track of the use of documents and
provide the necessary data to pay royalties to the copyright owner.
Nonetheless, a compulsory license might be desirable for the brittle
books program because it would draw in all publishers and provide
the library community with maximum certainty.

Essentially, a compulsory license grants a statutory blanket
permission to use a particular kind of work in a way that would
otherwise violate one of the exclusive rights of the creator in
return for the payment of a single fee to a central agency. The
royalties thus collected form a pool of funds from which
compensation is provided to creators participating in the system.
In the preservation context, such a license could authorize the
copying of complete protected works into facsimile or electronic
formats in return for the payment of a fixed fee. Libraries would
then no longer have to worry about whether or not a work was still
protected; they would not have to locate the publisher and seek
permission; they would not have to pay individual royalties or worry
about the copyright owner who comes out of the woodwork later to
make trouble.

The different compulsory licenses that now exist provide
different bases for the collection of royalties and suggest
different models for compensation. For cable television, rates are
established as a percentage of the gross receipts of the company;
for jukeboxes, an annual fee is paid for each machine; for making
and distributing phonorecords, a fee for each disk is levied for
each work on the disk; and for public broadcasting, fees are
collected for each performance of a covered work.207 The fees for cable television and
jukebox royalties are collected by the Register of Copyrights and
distributed by the Copyright Royalty Tribunal. The Copyright
Royalty Tribunal also sets or reviews the rates for cable
television, for phonorecords and coin-operated phonorecord players,
and for non-commercial broadcasting.

3. The Foreign Experience

Several foreign countries208 have
experimented with licenses administered through organizations
similar to the Copyright Clearance Center (CCC), known as
Reproducing Rights Organizations (RRO's). Those RRO's meet
regularly in an organization known as the International Federation
of Reproduction Rights Organizations.

By and large, RRO's are not neutral third parties. They are made
up either of individual publishers or of groups of publishers and/or
authors.209 Although the CCC began
its work in the United States by seeking royalties primarily from
the commercial sector, in many of the European countries collecting
societies have begun in the educational sector. This is true, for
example, in Great Britain, Australia, and Norway. Many of these
collectives are voluntary organizations operated by copyright owners
to simplify the negotiation of license agreements and to provide a
convenient mechanism for the collection of royalties. Some, such as
the CCC, and the CLA in Great Britain, were created in response to a
legislative or study commission suggestion. Others, such as those
in the Nordic countries, operate under a statute providing for a
system of collective license agreements.210

The mechanisms established by each organization for the
collection and payment of royalties differ from one country to
another, although in most cases, the basis of the charge is per page
copied, rather than an annual blanket license. The Copyright
Clearance Center has tried several different approaches, but in each
of them the individual publisher determines its own per page rate of
compensation. By contrast, in many other countries there is an
agreed-upon fixed rate for all publishers.211 In Finland, licenses provide for a
lump sum, rather than a per page, payment. In most cases,
distribution of royalties is based on a sampling of actual copies
made. Some organizations, such as the CCC, have tried to base
payments on actual copies, but the record-keeping burden is high and
sampling techniques have been found to be less problematic.

4. Oversight of Collectives

The downside of collectives is that they inevitably gain
substantial economic power over information users. As a result,
most countries have found it desirable to have some form of
oversight. Such oversight provides a means of controlling the
potential monopolistic power of the organization as well as a means
of resolving disputes about the amount of royalties or the types of
licensing arrangements that can be negotiated.

France212 now requires authors'
societies to notify the Minister of Culture of proposed changes in
rules for the collection and distribution of royalties. In
addition, a levy on blank tapes is set by a broad-based committee
that includes consumers. In Switzerland, an organization seeking to
collect copyright royalties must submit an application to the
Federal Department of Justice and Police. Thereafter, a subdivision
of the department, known as the Bureau of Intellectual Property,
supervises the activities of the society and an Arbitral Commission
oversees and approves the rate structure. Germany licenses
collecting societies under the German Patent Office. Collecting
societies and users' organizations negotiate and enter into
contracts with each other subject to arbitration if there is a
dispute about the reasonableness of the fees or the willingness of
another party to negotiate. A new law in Great Britain has created
an expanded copyright tribunal that has jurisdiction over licensing
disputes. With regard to photocopying licenses, the tribunal is
specifically instructed to consider three factors: (a) to what
extent published editions of the work are available; (b) the use to
which photocopies will be put; and (c) the proportion of the work
that will be photocopied under the license.213 In the United States, the Copyright
Royalty Tribunal administers some royalties (cable TV, record
production, and jukeboxes) and has the power to take action when the
parties cannot agree.

5. Collective Administration for Preservation Copying

Some form of collective agreement for the payment of copyright
royalties can give the library community protection against future
litigation. A voluntary agreement negotiated with the Copyright
Clearance Center (CCC) should provide protection from at least those
publishers for whom the CCC is authorized to act. Such an agreement
would require no legislative action and could proceed immediately.
The role of the CCC could be strengthened, however, if it was given
more explicit statutory authority to act on behalf of a group of
publishers much as is done for the music industry. Going further, a
compulsory license for preservation copying would give libraries
blanket permission to go forward with designated activities subject
to the payment of a statutory royalty fee to the appropriate
tribunal.

A first try at a compulsory license section might be provided by
using different sections of the current Act as models:

PROPOSED Section 119. Compulsory license for the preservation of
deteriorating works.
In the case of literary works, musical works, dramatic works,
pantomimes and choreographic works, pictorial or graphic works,
motion pictures and other audio-visual works, reproduced on a
deteriorating medium214, such as paper or film, the
exclusive rights provided by clauses (1), (3), and (5) of section
106, to make, distribute, and display publicly such works, are
subject to compulsory licensing under the conditions specified by
this section.
(a) Availability and Scope of Compulsory License.
(1) Any library or archive meeting the requirements of
Section 108(a) which is the lawful owner of a published or
unpublished literary work, musical work, dramatic work,
pantomime or choreographic work, pictorial or graphic work,
motion picture, or other audio-visual work reproduced on a
deteriorating medium and fixed on that medium more than ten
years previously, may obtain a compulsory license for the
reproduction of the work in any format and for the
distribution and display of that work to other libraries and
to individual users, provided that the library has no notice
that the copy would be used for any purpose other than
private study, scholarship or research.
(2) The compulsory license obtained by a library includes
the privilege of making and distributing a copy of the work
in any form or displaying the work publicly, but it does not
include the making of derivative products or permitting a
general right of resale other than as provided above. Such
copies will not themselves be granted protection as a
derivative work or a compilation, except with the express
consent of the copyright owner.
(3) The library may obtain a compulsory license by filing the
application with the Register of Copyrights and paying the
royalties provided by subsection (b).
(b) Royalty Payable Under Compulsory License.--
(1) The royalty under a compulsory license shall be payable
for every copy made and distributed in accordance with the
license, but not for copies merely displayed at another
library or displayed to an individual user for private
study, scholarship, or research. For this purpose, a copy
is considered "distributed" when a subsequent copy is made
in any tangible form, whether copied to paper, downloaded to
computer disk, or transferred to any other medium from which
it can be perceived, either directly or with the aid of a
machine or device.
(2) With respect to each work copied and distributed, the
royalty shall be 0.1 cents per page.
(3) A library that has obtained a compulsory license and
made and distributed copies thereunder shall, on an annual
basis, deposit a statement of account with the Register of
Copyright, in accordance with requirements that the Register
shall, after consultation with the Copyright Royalty
Tribunal, prescribe. That statement of account shall cover
the 12 months next preceding, and shall specify the number
of copies made and distributed and such other data as the
Register of Copyrights may, after consultation with the
Copyright Royalty Tribunal, require. The regulations
covering the annual statement of account shall prescribe the
form, content, and manner of certification with respect to
the number of copies made and distributed.
(c) Distribution of Royalties.--
(1) To be entitled to receive royalties under a compulsory
license, the copyright owner must be identified in the
registration or other public records of the Copyright
Office. The owner is entitled to royalties for copies made
and distributed after being so identified, but is not
entitled to recover for any copy previously made and
distributed.
(2) The Register of Copyright shall receive all fees
deposited under this section and, after deducting the
reasonable costs incurred by the Copyright Office under this
section, shall deposit the balance in the Treasury of the
United States, in such manner as the Secretary of the
Treasury directs. All funds held by the Secretary of the
Treasury shall be invested in interest- bearing United
States securities for later distribution with interest by
the Copyright Royalty Tribunal as provided by this title.
The Register shall submit to the Copyright Royalty Tribunal
on an annual basis, a detailed statement of account covering
all fees received for the relevant period provided by
subsection (c) (3).
(3) During the month of January in each year, every person
claiming to be entitled to compulsory license fees under
this section for copies made and distributed during the
preceding twelve-month period shall file a claim with the
Copyright Royalty Tribunal, in accordance with requirements
that the Tribunal shall prescribe by regulation. Such claim
shall include an agreement to accept as final, except as
provided in section 810 of this title, the determination of
the Copyright Royalty Tribunal in any controversy concerning
the distribution of royalty fees deposited under this
section to which the claimant is a party. Notwithstanding
any provisions of the antitrust laws, for purposes of this
subsection any claimants may agree among themselves as to
the proportionate division of compulsory licensing fees
among them, may lump their claims together and file them
jointly or as a single claim, or may designate a common
agent to receive payment on their behalf.
(4) After the first day of July of each year, the Copyright
Royalty Tribunal shall determine whether there exists a
controversy concerning the distribution of royalty fees
deposited under this section. If the Tribunal determines
that no such controversy exists, it shall, after deducting
its reasonable administrative costs under this section,
distribute such fees to the copyright owners entitled, or
to their designated agents. If it finds that such a
controversy exists, it shall, pursuant to chapter 8 of this
title, conduct a proceeding to determine the distribution of
royalty fees.
(5) The fees to be distributed shall be divided as follows:
(A) to every copyright owner not affiliated with a
reproducing rights organization, the pro rata share of
the fees to be distributed to which such copyright owner
proves entitlement.
(B) to the reproducing rights organizations, the
remainder of the fees to be distributed in such pro rata
shares as they shall by agreement stipulate among
themselves, or, if they fail to agree, the pro rata
share to which such organizations prove entitlement.
(C) during the pendency of any proceeding under this
section, the Copyright Royalty Tribunal shall withhold
from distribution an amount sufficient to satisfy all
claims with respect to which a controversy exists, but
shall have discretion to proceed to distribute any
amounts that are not in controversy.
(6) The Copyright Royalty Tribunal shall promulgate
regulations under which persons who can reasonably be
expected to have claims may, without expense to or
harassment of the libraries, obtain such information with
respect to copies made and distributed as may be reasonably
necessary to determine, by sampling procedures or otherwise,
the proportion of copying from the works of different
copyright owners. Any person who alleges that he or she has
been denied the access permitted under the regulations
prescribed by the Copyright Royalty Tribunal may bring an
action in the United States District Court for the District
of Columbia for the cancellation of the compulsory license
and the court shall have the power to declare the compulsory
license thereof invalid from the date of issue thereof.
(d) Definition.--
For purposes of this section a "reproducing rights
organization" is an association or corporation that licenses
the making of copies on behalf of copyright owners such as
the Copyright Clearance Center.

A few comments on this proposal seem necessary. First, it should
be noted that under this proposal, the royalty is to be paid on
all copies made and distributed under the license, not just
those still under copyright. The purpose of this suggestion is for
ease of administration and to make it unnecessary to make a
determination about copyright status each time a work is
distributed. This could have come out another way, but the burden
of making copyright determinations for each transaction would be
significant. Although such a change would reduce the number of
royalty payments, the amount per page would then have to be higher
to generate an appropriate amount of revenue for subsequent
claimants.

The suggestion of 0.1 cents per page as a royalty payment is
wholly arbitrary. It is suggested based on the royalties noted
above for foreign jurisdictions which amount to an average of about
2 cents per page215 for protected
works. The lower amount paid on all copies seems reasonable, to
generate a similar amount of revenue.

Like the existing law, this proposal strikes a middle ground
between compulsory and voluntary licensing. The compulsory license
is created, but administration of royalties is largely left to one
or more voluntary organizations like the Copyright Clearance
Center.

E. Set Up Internal Royalty Payment Fund

The reaction of some librarians to the proposals for a statutory
amendment, such as the amendment to Section 108 or the creation of a
compulsory license, has been negative. They are aware of the
difficulty there would be in carrying such a proposal through
Congress. It has been suggested, for example, that any such proposal
would have to come to Congress with the joint support of both the
publishing and library communities. While such a bipartisan
approach is a possibility, the past history of copyright
negotiations suggests that agreement will not be easy. Moreover,
there is also a sense it may still be too soon to reopen the
copyright discussion, that doing so will simply reopen the wounds
from the copyright revision battles of the 1970's. Thus, there is
significant appeal to the idea of finding a means to allow the
preservation program to go forward without a statutory change.

Without any statutory amendment, cooperating libraries could
follow some of the ideas set out above. They could, for example,
negotiate with publishers where possible, but in any event, assess
themselves a specific amount of money to set aside for the potential
payment of royalties. Again, the amount of money is likely to be
somewhat arbitrary, but the ultimate goal would be to create a pool
of funds from which the libraries could pay any legitimate claimants
the royalties to which they are due. The fund should be large enough
to cover attorney's fees and any litigation expenses that might also
be necessary. The actual amount set aside might be 1 cent per page
or a dollar per volume, indexed to inflation, and it might vary with
the activity-- more for copies distributed, less for making the
preservation master.

It must be stressed that this idea is not the equivalent of the
compulsory license without the statute. Most importantly, unlike
both statutory amendments suggested here, it would give libraries no
greater rights than already exist under the statute. Both proposed
amendments have tried to legalize the conversion of materials into
electronic formats. That idea would not be accommodated by this
proposal. Moreover, the compulsory license proposal accommodates
newer materials by allowing a limited copying and distribution
privilege for materials at least ten years old. Without a statutory
amendment, such copying would continue to be problematic.

This proposal to create a royalty payment fund would create some
level of financial security by establishing a pool of funds that
could be used to pay legitimate claimants and hire legal counsel
should that become necessary. However, it will also increase the
transaction costs since there will be a need to negotiate with
individual claimants and make decisions about how much compensation
they should be given for the use of their work. In the end, of
course, if the claimants are not satisfied, they could still bring
legal action. Thus, although this route may seem easier at the
outset because it avoids the necessity of seeking a Congressional
amendment, in the long run it may actually create more problems and
take more time.

F. Create Quasi-Governmental Corporation

In addition to the foregoing ideas, consideration should also be
given to creating a quasi-governmental corporation that would
provide a financial base for the preservation infrastructure and
would create a permanent organization for carrying out the
preservation agenda. Such an organization could be modeled on the
Corporation for Public Broadcasting and could operate in the public
interest.

There was a discussion about a similar organization for the
ill-fated National Periodicals Center (NCP) in 1979. Interestingly,
the goal of that earlier effort was similar to the long-term goal of
the Commission. The goal of the NPC, as articulated in the draft
bill, was:

to serve as a national periodical resource by contributing to the
preservation of periodical materials and by providing access to a
comprehensive collection of periodical literature to public and
private libraries throughout the United States.216

The Commission has stated its "ultimate vision" as:

the existence of a collective knowledge base, in digitized
format, from which individual institutions and individual scholars
can obtain a variety of formats to serve their scholarly objectives
and programs. Initially, this "national collection" could take the
form of a centralized depository of microfilms with access through
on-line bibliographic services and efficient twenty-four hour
delivery mechanisms with the expectation that storage, access, and
service enhancements will evolve with the increasing use of
technology by scholars and expanded availability of network
capabilities to the research community.217

The 1979 draft bill would have authorized the creation of a
Corporation and established its governance structure. It was to be
a tax-exempt corporation with a director and a 15-person Board. Its
base budget from federal appropriations was to be set at $750,000,
but it would have had the authority to obtain grants and make
contracts with individuals and with private, state and federal
agencies, organizations and institutions.

Unfortunately, the National Periodicals Center foundered largely
because of a fear from the publishing industry that it would become
a large central library on which other libraries would rely, causing
the cancellation of large numbers of subscriptions to current
periodical literature. In that sense, while the proposal for the
NPC was a good one, it failed to deal with the legitimate concerns
of publishers and the need to provide an adequate mechanism to
assure the payment of appropriate royalties. There was language in
the bill that suggested the Corporation should take these concerns
into account but no mechanism was created for doing so. It may be
that a quasi-governmental corporation focused on the preservation of
non-current materials with a clear mechanism for the payment
of royalties similar to that proposed under the compulsory license
section, supra, would have a better chance of success.

The success of a proposal such as this will depend on it having
support from both the library and the publishing communities. The
publishing community may be receptive to the idea if it (1) does not
undermine the current subscription base, and (2) creates a clear
mechanism for the payment of appropriate royalties.